Chief executive Steve McCann emphasised the strong position of Lendlease's core business but acknowledged he was disappointed with the performance of its non-core operations.

Advertisement

"It was a difficult year for the group with the provision taken in the first half for underperforming engineering projects impacting the overall result."

Lendlease booked a $500 million pre-tax hit in the first half of the year to cover cost overruns on the Gateway Upgrade North in Queensland, and Kingsford Smith Drive and the NorthConnex M1/M2 Tunnel in Sydney.

The group's engineering division recorded a $461 million earnings before interest, depreciation and amortisation (EBITDA) loss for the year, more than double the previous year's $218 million.

Lendlease said the restructuring costs in its engineering business had been contained and the business was up for sale with several interested buyers in due diligence.

"The sales process has been initiated for the engineering business and we have several parties in due diligence," Mr McCann said.

"We are committed to getting the best outcome on the sale."

Loading

Profit from its core business was $804 million, delivering a "solid" return on equity of 12.8 per cent.

The development pipeline was close to $100 billion and Lendlease reported a 17 per cent lift in funds under management to $35.2 billion.

The overall results were in line with market expectations with an improved second half to June 30.

Ben Brayshaw, an analyst at JP Morgan, said the building giant was in a relatively sound capital position.

The group added three major urbanisation projects during the year in Milan, Chicago and Sydney.

"There is a visibility in our future earnings growth through these projects," Mr McCann said.

Lendlease, one of the larger players in the US and UK build-to-rent industries, said the tax regime in Australia was an obstacle to rolling out similar projects here.

Australia's housing market was "nearing the bottom" of the cycle. "We expect to see that translate into sales in the coming months," he said.

The group reported a 100 per cent settlement for its Darling Square project in Sydney and will soon start marketing the first of the three apartment towers called 1 Sydney Harbour, at Central Barangaroo.

Mr McCann said of the apartment construction issues in Sydney, that there has been a flight to the quality of well-known developers with a track record.

Chief financial officer officer Tarun Gupta said Lendlease continues to "support a simple, stable and uniform enforceable set of regulations that provides clarity to the construction market".

The group's share price rose 10.26 per cent to close at $14.93, making up some ground after a significant plunge over the previous 12 months when investors marked it down on the back of the engineering difficulties.

From August last year to February this year the stock crashed from a high of $21.60 to a low of $11.11.

Lendlease said it would pay a full-year distribution of 42 cents per stapled security. It will be paid on September 16.